Judge Grants Preliminary Approval to $38 Billion Swipe Fee Settlement

U.S. District Judge Brian M. Cogan granted preliminary approval to a revised $38 billion settlement between Visa Inc., Mastercard Incorporated, and more than 12 million merchants. The agreement resolves a class-action antitrust lawsuit dating back to 2005, which alleged the two payment networks conspired to charge excessive credit card processing fees, commonly known as swipe fees.

Under the terms of the deal, swipe fees will decrease by 0.1 percentage point over five years, and standard consumer card rates will be capped at 1.25% for eight years. The settlement also eliminates the "Honor All Cards" rule, which previously required merchants to accept all cards from a network; merchants may now selectively accept cards based on category and have more flexibility to impose surcharges on customers.

Despite the approval, the deal faces significant opposition from major retailers, the National Association of Convenience Stores, and the National Retail Federation. These objectors argue that the recovery is insufficient and fails to fix a broken payment network framework. Judge Cogan acknowledged receiving nearly 40 objection letters but stated it is too early to determine if these concerns represent the broader merchant class or a vocal minority. He maintained that the court's role is to determine if the settlement is fair, reasonable, and adequate rather than ideal.